Pubdate: Thu, 01 Dec 2016
Source: National Post (Canada)
Copyright: 2016 Canwest Publishing Inc.
Contact: http://drugsense.org/url/wEtbT4yU
Website: http://www.nationalpost.com/
Details: http://www.mapinc.org/media/286
Author: Sunny Freeman
Page: FP1

HERB YOUR ENTHUSIASM: POT PRODUCERS

TORONTO - Canada's task force on legalizing pot concluded its highly
anticipated report for the federal government Wednesday, but some
marijuana producers believe pot-watchers need to chill expectations
for legal recreational sales any time soon.

"It's a long path to legalization," said Brendan Kennedy, CEO of
private equity firm Privateer Holdings, which has a global portfolio
of marijuana-focused investments.

Speculation that the Task Force on Marijuana Legalization and
Regulation report will kickstart a multi-billion dollar legal
recreational market is a major reason for a recent frenzy in pot
stocks - which has led to massive volatility in share prices of
Canada's publicly traded licensed producers.

Ottawa has committed to introducing legislation in the spring of 2017.
Many analysts have suggested a legal market could be implemented as
early as Jan. 1, 2018. The task force's report is expected to go to
cabinet and be made public at the end of December.

"The federal government is planning to legalize recreational marijuana
in Canada by 2017 (with sales likely to commence in 2018)," Canaccord
Genuity analysts noted in a report focused on the market's $6 billion
sales potential by 2021.

But Kennedy believes market exuberance is causing investors to run
ahead on their bets.

"Investors sort of have these expectations baked in that are
unrealistic," he said. "I think January 1, 2019 would be optimistic …
even 2020, when all ( is) said and done."

There are many moving parts involved in a process that would upend
centuries of prohibition - including writing and approving
legislation, and drafting a swath of regulations from minimum wage
restrictions to defining retail outlets, followed by province-by
province implementation.

Task force leader and former deputy prime minister Anne McLellan has
said it is critical the government goes slow on reforming the laws,
while the Canadian Medical Association has urged a phased-in approach
with potential pilot projects in certain regions.

Expecting implementation within one year of legalization seems overly
optimistic, said Guillermo Delmonte, CEO of International Cannabis
Corp., which became the first international marijuana company to list
on a Canadian stock exchange this week.

"One year sounds like, wow - a dream," he said.

His company witnessed firsthand Uruguay's bumpy road to become the
first country in t he world to legalize marijuana sales.

The company decided to list in Canada to give investors feeling
overexposed to uncertainty in the Canadian market a chance to
diversify into a market where recreational use is already legal. Its
stock shot up 360 per cent on its first day of trading on the TSX
Venture Exchange.

"In Uruguay, since they started discussions on how they would choose
to implement and get approval from both chambers (of government), it
took more than five years," he said.

"So doing it in a year sounds like it's too quick for this important
issue."

Ur ug u a y announced plans to legalize marijuana in 2012. The
country's House of Representatives and Senate passed the bill in
2013, making it technically legal.

But President Jose Mujica announced in mid-2014 that legal cannabis
sales would be postponed until 2015 due to "practical difficulties" as
the government worked out how to set it up.

About a dozen countries have recently loosened marijuana laws or are
in the process of doing so.

That's one of the reasons why Kennedy, also the president of Tilray, a
licenced medical marijuana producer in Nanaimo, B. C., isn't in any
rush to position his company for the recreational market in Canada.

The company is focused on being an international export hub for
countries where medical marijuana - backed by high-level research -
is in demand. In its latest announcement, Tilray said it will support
a clinical trial at the Hospital for Sick Children in Toronto to test
the medical uses to treat epilepsy.

Kennedy said Tilray is taking a wait-and-see approach on whether the
government allows companies to overtly brand their products.

"Our fundamental hypothesis is that branding is what allows the legal
market to wipe out the illicit market," he said.

Think of it as the difference between Grey Goose and moonshine.

"Giving a consumer a choice between a well-branded tested quality
product versus a product produced in the illicit market, everyone's
going to choose the branded product."

At the same time, Canada has the eyes of the world on its successes
and failures, said Kennedy, adding he has been to 15 countries in the
past year, all of whom are eager to see how Canada rolls out a
recreational market.

"Just as the task force went to Washington and Colorado to see what
recreational cannabis looks like in the U. S., other countries are
looking to see what does Canada's recreational market look like at a
national level."
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MAP posted-by: Matt